Media Mentions
2010
Steven Scholes is mentioned in a March 6 Wall Street Journal profile of Thomas Quinn, who according to the story has been involved in securities fraud for more than five decades. Mr. Scholes recalled that, when he was deposing Quinn while serving as a receiver for the SEC in a 1996 Quinn-related case, a plane flew by towing an advertising banner that read, “Leave Tommy Alone.” Mr. Scholes said he couldn’t help but laugh as Quinn read the message out loud.
Steven S. Scholes, SEC Defense, Securities Litigation, Trial
Steven Scholes was quoted by Law360 on January 19 concerning the almost $600 million in fines and settlements paid by companies in 2009 to settle the ten largest stock option backdating cases, a development that may indicate that major options backdating litigation is drawing to a close. “My sense is that the bulk of the settlements have been made public already,” Mr. Scholes said. “These things kind of go in waves, and I think most of these have moved through the system.”
Steven S. Scholes, SEC Defense, Trial
Steven Scholes spoke to Law360 (January 14) about the new powers of the Security and Exchange Commission’s Enforcement Division attorneys. “I anticipate that it will be a sea change in the enforcement program and will lead to the Division of Enforcement bringing many more cases that otherwise it might not have,” Mr. Scholes said, referring specifically to changes that will enable the SEC to gain greater cooperation from informers and companies. He added about the new SEC cooperation procedure: “My anticipation is that people will take them up on it and it will expedite their investigations and help them bring cases.”
Steven S. Scholes, SEC Defense, Trial
Steven Scholes was among the lawyers included in the January 13 announcement by Law360 on the formation of its 2010 securities editorial advisory board. Members of the board are leading securities law professionals who will provide guidance to Law360 regarding important issues and developments in the field. Mr. Scholes heads the Firm’s SEC defense group and subprime and credit markets litigation group, leads the Trial Department in the Chicago office, and is a former lawyer in the SEC’s Enforcement Division.
Steven S. Scholes, SEC Defense, Securities, Trial
Steven Scholes was quoted in PlanAdviser.com (January 11) examining how financial regulators view investment adviser use of social networking. He said the SEC would view as advertising an adviser's use of electronic media for stock tips, noting that, with the Internet's speed, "it would be very easy to slip very unknowingly...into making communications that constitute advertising without realizing it." Mr. Scholes suggested that investment firms either tell employees "you cannot use social networking for anything having to do with the firm," or require preapproval of social networking use ("because these communications are so fast, pragmatically it's very difficult to implement a policy like that," he noted), or allow social networking use only with clients and not the general public. "All of these approaches carry regulatory approval, just in different degrees," Mr. Scholes said, and can be an "insurance policy" to show regulators that proper procedures were used.
Steven S. Scholes, SEC Defense, Trial
2009
Steven Scholes was cited in an August 27 Plan Advisor story about how the Securities & Exchange Commission and other financial regulators view the use of social networking sites by financial advisors and brokers under advertising and communication rules. Mr. Scholes stated his belief that the SEC would take the position that advertising is advertising, regardless of the medium. However, a problem could arise if what an SEC lawyer considers advertising is not seen that way by employees of financial firms.
Steven Scholes was quoted extensively in Compliance Week (June 30) about the substantial increase in class action securities lawsuits related to the financial crisis. Mr. Scholes stated that such an increase “was only to be expected given the market dislocations we’ve had over the last 18 months or so,” adding that “a tremendous amount of litigation” involves structured financial products such as collateralized debt obligations. He also predicted there is “a significant likelihood there will be more” litigation over credit default swaps. An increasing number of lawsuits are targeting asset management firms, and Mr. Scholes attributed that to the “unprecedented size, scope and number of the alleged Ponzi schemes, which seem to be coming to light as a result in the decline in asset values. I think that wave is still building and has yet to crest.”
Steven S. Scholes, Class Action, Securities Litigation, Trial
Steven Scholes addressed in a June 8 Law360 story the breach of contract lawsuits that several monoline insurers have filed against financial institutions over subprime-related losses. He stated his belief that, because the insurers are suing for breach of contract, they could win on their misrepresentation claims, and even if their fraud claims are not upheld, they could help fend off claims from investors. "It's almost a backdoor defense of the claims made in the class case" against the insurers, Mr. Scholes said. He added that getting a court to recognize that they made investment decisions based on misstatements from CDO securities originators and marketers could provide a significant boost in the insurers' public perception.
Steven S. Scholes, Subprime and Credit Markets, Subprime and Credit Markets Litigation, Trial
Steven S. Scholes was quoted on January 14 by Law360 in an article regarding the decreasing number of securities litigation cases filed over the past few years. Mr. Scholes noted that the 1998 Securities Litigation Uniform Standards Act (SLUSA) pushed securities class actions into federal courts, thereby eliminating many follow-on state court securities claims. "That phenomenon has made the process much more efficient," said Mr. Scholes. He noted, however, that the number of cases filed will likely increase due to the financial crisis. "I think that it's increasing and will continue to increase. And frankly, I don't think there's much doubt about that," he said.
Steven S. Scholes, Securities Litigation, Trial
2008
Steven S. Scholes was quoted on November 11 by Law360 in an article regarding the greater level of regulation expected under Obama's Securities Exchange Commission (SEC). Mr. Scholes noted that the current enforcement staff has suffered from low morale under Christopher Cox's leadership and from signals sent by the Bush administration. He added that while the number of cases pursued by the SEC has increased, the cases tend to be small and focused on individuals rather than companies. "A new chairman, for example, who has a more aggressive bent toward enforcement can certainly cause the current staff to be much more aggressive and robust," he noted. "I think that it is very easy to understand the case that additional regulation is needed given what we've been through this year to date," Mr. Scholes added.
Steven S. Scholes, SEC Defense, Trial
Steven S. Scholes was quoted in the June 11 issue of Fortune Magazine in an article regarding the Commonwealth of Massachusetts' claim that Phil Goldstein, a hedge fund manager, violated rules prohibiting the marketing of hedge funds to average investors. In response, Goldstein and his firm filed suit in March 2007 against the secretary of the Commonwealth, claiming that the secretary had violated Goldstein's right to free speech. Mr. Scholes noted that if Goldstein wins his case, changes will likely be made in how hedge funds raise capital. "You would see more advertising in every imaginable form, especially by smaller, less established, and possibly riskier firms that need more capital. It would benefit them much more than the big houses," he said.
Steven S. Scholes, SEC Defense, Trial
Steven S. Scholes was quoted in the April issue of CFO Magazine in an article regarding the unpredictably and complexity of going to trial in class-action shareholder lawsuits. As a partner in McDermott Will & Emery's Trial Department, Mr. Scholes noted that despite uncertainty, the rising costs of settling have made going to court more attractive. "The tremendous increase in the dollar value of settlements has greatly altered the economics of securities class cases. You can see how the balance would tip toward going to trial, if you have a good defense," he said.
Steven S. Scholes, Class Action, Trial
2007
Steven S. Scholes was quoted in the November/December issue of Corporate Board Member regarding updates on directors' and officers' insurance. Mr. Scholes discussed how although there is no rule to how much D&O coverage a company should carry, many organizations are underinsured. Mr. Scholes stated that your company should ask, "how it decided what limits to purchase and what the typical settlement values are for comparable-size companies in the same industry."
Steven S. Scholes, Insurance, Trial
Steven S. Scholes completed a Q&A on October 8 published by Securities Law360 regarding his work in white-collar and securities law.
Steven S. Scholes, SEC Defense, Trial
Steven S. Scholes was mentioned in the September issue of Leading Lawyers Network Magazine in recognition of being named a top business lawyer in Illinois. This recognition is based on peer nominations.
Steven S. Scholes was quoted in an August 1 article published by CFO Magazine regarding the effect of the Sarbanes-Oxley Act on the relationship between the Securities and Exchange Commission (SEC) and other key players. Mr. Scholes notes that the relationship with the Financial Accounting Standards Board (FASB) is particularly complicated due to a history of being at odds with each other. "It is eminently clear that the SEC is insisting on a seat at the table during the process through which FASB members are nominated. What is not as clear is how the SEC will use that seat," Mr. Scholes said.
Steven S. Scholes, SEC Defense, Trial
Steven S. Scholes was quoted in a February 22 article published by CFO.com regarding an NYSE trading specialist who was acquitted of fraud charges in the Southern District of New York. Mr. Scholes commented on SEC Rule 10b-5, particularly its use by prosecutors to charge individuals who deceive or mislead financial statement readers. He explained that 10b-5 is "the heart and soul" of the federal antifraud provision.
Steven S. Scholes, Corporate Responsibility and Governance, Trial
2006
Steven S. Scholes was quoted in the August edition of the Chicago Lawyer in an article regarding the decline of securities class action suits. Mr. Scholes commented on how the decline may be based on the fact that most of the major cases have settled and as a result of the Sarbanes-Oxley Act as well as a series of high profile scandals, companies have been deterred from engaging in fraudulent behavior. "Some of the larger, more well-publicized cases we've been reading about may be working their way through the system and returning us to a more normal state of affairs," Mr. Scholes said.
Steven S. Scholes, SEC Defense, Trial
Steven S. Scholes was quoted in a May 2 article published by Securities Law360 regarding McDermott's close link between the firm and federal regulators. Mr. Scholes, a former attorney to the SEC's Division of Enforcement, discusses how these relationships often help their clients avoid a trial altogether. "We value very highly the credibility that we have with government lawyers. Much of our practice is against the government or regulatory agencies and we greatly guard the reputation we've developed with them over the years," Mr. Scholes said.
Steven S. Scholes, SEC Defense, Trial
Steven S. Scholes was mentioned in the March edition of The American Lawyer in an article regarding former stock trader Daniel Calugar's agreement to pay the Securities and Exchange Commission $153 million in a mutual funds settlement.
Steven S. Scholes, SEC Defense, Trial
Steven S. Scholes was mentioned in the February edition of Chicago Magazine in recognition of being named among the top five percent of securities litigation attorneys by Illinois Super Lawyers 2006 . This recognition is based on peer nominations and independent research.
Steven S. Scholes, SEC Defense, Trial
Steven S. Scholes was mentioned in a January 11 article published by The New York Times regarding former stock trader Daniel Calugar's agreement to settle the Securities and Exchange Commission's accusations that he improperly traded mutual funds after market hours.
Steven S. Scholes, SEC Defense, Trial
2005
McDermott was featured in four cases and one M&A deal in the Crain's Chicago Business's list of 2005's big litigation and deals published on September 19. Lazar Raynal (Pritzker v. Pritzker), Rick Meyer (Lorillard Tobacco Co. v. Chester Wilcox & Saxbe LLP), Steven Scholes (SEC v. Calugar), Mike Pope and Christopher Murphy (Oshana v. Coca-Cola Co.), all trial partners based in Chicago were mentioned in the litigation list. John Tamisiea and Michael Fayhee were mentioned in the deal list for Gardner Denver Inc.'s purchase of Thomas Industries Inc.
Michael R. Fayhee, Derek J. Meyer, Christopher M. Murphy, Michael A. Pope PC, Lazar P. Raynal, Steven S. Scholes, John P. Tamisiea, Corporate, Mergers & Acquisitions, Trial
Steve Scholes was quoted in the May issue of CFO Magazine on the increased cost for companies to settle securities lawsuits. In 2004 the number of suits settled was up 23 percent from 2003 but the total cost to settle the case more than doubled to $5.5 million. The larger settlements are mostly due to the larger losses incurred by the plaintiffs and pressure to settle quickly to focus on regulatory issues. "The claimed damages are massive," commented Mr. Scholes
Steven S. Scholes, Securities, Securities Litigation, Trial
Steve Scholes was quoted in the January issue of D&O Advisor regarding Sarbanes-Oxley and barring defendants in fraud cases from serving as directors or officers of public companies. The D&O bar from serving as an officer or director may last five, ten or 15 years, or a lifetime. It's a "career death sentence" Mr. Scholes commented. Even a five-year bar could stigmatize executives or board members for the rest of their working lives, he continued. There are currently no statistics on the number of directors and officers who resist a D&O bar. Although it is believed that such cases are rare, Mr. Scholes predicts they are likely to grow, "We're at the precipice of a change."
Steven S. Scholes, Corporate Responsibility and Governance, Trial
2002
Steven Scholes was quoted on August 8 in BestWire regarding corporate officers signing off on the veracity of their company's financials. Mr. Scholes explained the penalties, although not criminal, of this Securities & Exchange Comission requirement. "Any time an officer makes a statement to the public that is later deemed misleading, the signer is exposed to the federal securities law." He also commented that the law increases the penalties for white-collar crimes, including a $5 million fine and up to 20 years in prison.
Steven S. Scholes, Corporate Responsibility and Governance, White-Collar Criminal Defense
1998
Steven S. Scholes was quoted in an April 19 article published by The Chicago Tribune regarding Monetta Financial Services' president, Robert Bacarella, being accused of securities fraud by the SEC. Mr. Scholes commented on the unprecedented case, which is the first case that involves personal trading by fund directors. "I think [SEC officials] are chilling people [who serve as fund directors] right now. The problem is it's patently unfair," he said.
Steven S. Scholes, SEC Defense, Trial
Steven S. Scholes was quoted in a March 3 article published by The Wall Street Journal regarding the SEC case against Monetta Financial Services for passing along new stocks to the personal brokerage accounts of three of its funds' directors. Mr. Scholes commented on this unprecedented case, stating that "we believe the case addresses industry-wide issues that the commission should address by rule."
Steven S. Scholes, SEC Defense, Trial
1997
Steven S. Scholes was quoted in a November 14 article published by The Daily Business Review regarding Randall J. Fons' appointment as the new director of the Southeast regional office of the Securities and Exchange Commission. Mr. Scholes has had several cases against Mr. Fons. "He knows the securities laws inside and out and is appropriately aggressive...He pursues cases very hard, and yet at the same time he is willing to listen to reason and mitigation factors and is easy to get an audience with," Mr. Scholes said.
Steven S. Scholes, SEC Defense, Trial
Steven S.Scholes was quoted in an October 13 article published by Best Week regarding Delaware Insurance Commissioner Donna Lee H. Williams filing suit against National Heritage Life Insurance Co. in order to recoup policyholders' losses. Mr. Scholes stated that his client, Ms. Williams, "filed a 17-count suit against 59 defendants in the $400 million collapse of National Heritage Life."
Steven S. Scholes, SEC Defense, Trial
1995
Steven S. Scholes was mentioned in a December 1 article published by Mealey's Litigation Report regarding a federal magistrate judge's decision that a receiver be appointed to supervise the loan servicing process of National Heritage Life Insurance Co.
Steven S. Scholes, SEC Defense, Trial
Steven S. Scholes was quoted in the December edition of the Securities Regulation & Law Report regarding the involvement of charitable organizations in a Ponzi scheme resulting in failing to win the U.S. Supreme Court review. Mr. Scholes has been appointed as receiver. "The far reaching effects of the decision below are exaggerated and unfounded, however even if this court were to give credence to those claimed effects, Petitioners' desired protection from the decision below must come from the Illinois legislature, not from this Court," Mr. Scholes said.
